With more pressure on OEMs and insurers to adopt ESG practices, the benefits of using recycled parts become greater.
We’ve seen a growing focus on Environmental and Social Governance (ESG) practices over the last few years, and as I referred to in previous articles, there are significant benefits for auto recyclers when it comes to the auto repair sector and the circular economy.
In terms of solid environmental practices, it’s something auto recyclers have been doing for years. Here in Canada, the Canadian Auto Recyclers Environmental Code, (CAREC), developed by ARC for Environment Canada, has proven very successful. It provides a practical solution to environmental stewardship by offering incentives to those recyclers that improve their performance in this area and scrutinizing those that don’t—giving them an opportunity to analyze where they are and a road map to improve their environmental credentials.
Over the last few years here at ARC, we’ve been talking to our members more and more about ESG. This not only concerns looking at things from a macro-economic standpoint but how, by being part of an initiative like CAREC, recyclers can do their part in protecting the local environment. Plus, they can also position themselves favourably when it comes to working with insurers and even OEMs—who, increasingly, are having to adopt environmental management plans, driven by ESG directives.
A big win for us is that using local, recycled parts, reduces our carbon footprint which for collision repairers, pushes down their greenhouse gas (GHG) calculations and improves their ESG scores. And it’s something we can use to sell the advantage of our business model to insurers, who today, almost universally, have ESG guidelines they need to adhere to.
We’ve had discussions with several insurance companies who are having to supply information at the operational level to senior management to meet these requirements, including carbon offsets. As a result, recycled parts are becoming more important in the overall claims process, and this led to more emphasis on tracking the carbon life cycle of individual vehicle parts.
In the UK, a large recycling group, SYNETIQ, which is part of IAA, has been actively focused on carbon labelling and is recognized as the first auto recycler and dismantler to implement such an initiative. By prudently measuring CO2 savings and comparing them with newly manufactured parts, SYNETIQ has discovered that for some parts, such as doors, hoods, and tailgates, using recycled parts represents over 90% in carbon savings compared to newly manufactured OE parts.
Although the data from SYNETIQ is UK-specific, it does show what the benefits can be in adopting these kinds of practices, even here in Canada. We’ve even seen OEMs starting to embrace the idea that recycled parts can provide benefits for their own ESG initiatives and at ARC, we’re having more of these types of conversations, where they understand the role recyclers play in the circular economy and for both sides to work together.
Ultimately, whatever the future holds for the automotive sector, whether it’s electric propulsion, ICE, hydrogen or a combination thereof, the important thing is that we create a healthy business environment—one in which all of us continue to have the ability to sell parts easily and profitably. This will ensure that not only will vehicles continue to be repaired, but that our citizens and our economy can keep moving.